Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Roberto Botticelli Ballet Flats - Women Roberto Botticelli Ballet Flats online on YOOX United Kingdom - 11375786JA , Janet Sport Ankle Boot - Women Janet Sport Ankle Boots online on YOOX United Kingdom - 11060856AU , Liu ?Jo Shoes Court - Women Liu ?Jo Shoes Courts online on YOOX United Kingdom - 11281765IXCharlotte Olympia Ankle Boot - Women Charlotte Olympia Ankle Boots online on YOOX United Kingdom - 11531282WDLe Silla Ankle Boot - Women Le Silla Ankle Boots online on YOOX United Kingdom - 11287464AC , Coconuts by Matisse Tan Neptune SandalsIGNITE Flash evoKNIT Women's Training Shoes | Island-Whisper White-White | PUMA Private Sale | PUMA United StatesPUMA Spirit TT Turf Soccer Shoes | White-Black-Silver | PUMA Soccer | PUMA United States , Palomitas By Paloma Barceló Espadrilles - Women Palomitas By Paloma Barceló Espadrilles online on YOOX United Kingdom - 11272031ME , Calvin Klein Wedge Heel Like New Very Pretty SandalsCUMBIA 30588 Fucsia WEDGE-HEEL SANDALS FOR WOMEN , OH ISABELLA 217 WEDGE-HEEL ESPADRILLES FOR WOMENwomens ALAÏA Black Bombe Sandals Hot sale , men's/women's Walking Cradles Gracie Boots First qualityEsprit ANNA - High heeled sandals , Men/Women Calvin Klein Shilo Sandals Modern and stylish fashionmen/women Nine West Jacquerie Heels Diverse new design , Cosmoparis JOSS - High heeled sandals Colour: corailHi-Tec RAVUS VENT MID WP - Walking boots - charcoal/cool grey/dark slateAdidas Skateboarding | adidas Skate Boarding Matchcourt Cf Sneakers With StrapsGuess Espadrilles - Women Guess Espadrilles online on YOOX United Kingdom - 11493343QP , Fitflop Loafers - Women Fitflop Loafers online on YOOX United Kingdom - 11471793SDVicini Sandals - Women Vicini Sandals online on YOOX United Kingdom - 11312330GK , Patrizia Pepe Sneakers - Women Patrizia Pepe Sneakers online on YOOX United Kingdom - 11216177TU , J.W.Anderson Ankle Boot - Women J.W.Anderson Ankle Boots online on YOOX United Kingdom - 11503326VP , Proenza Schouler Espadrilles - Women Proenza Schouler Espadrilles online on YOOX United Kingdom - 11150352XELadies Nike Womens New Sneakers On-lineReliable quality Woodlore Expandable Shoe Rack , At a lower price Stacy Adams ElstonAndre Assous Pink Sariah Espadrilles Slide 332 Blush Suede Sandals ,
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.